The blogosphere has lately been debating the true value of eBay after Bear Stearns analyst Robert Peck upgraded the shares and set a price target of $33. Barron's tech trader covered the news yesterday, and today Fat Pitch Financials weighs in at SeekingAlpha.
Fat Pitch blogger George (I couldn't find his name on the site, but he is a Buffett-style amateur investor with sterling academic credentials) thinks it's not time to buy eBay yet. He comes up with an intrinsic value for the stock of $28.75. But he says eBay, now at $24.50, would have to drop to $21.50 before he would jump in.
He dubs it only "worth watching" noting that eBay overpaid for Skype, its partnership with Yahoo may not lead to much until Yahoo gets its new ad software up and running, and its core e-commerce site is too cluttered and complicated to attract the scads of new buyers it needs -- despite the launch of eBay Express.
I have to agree with much of his analysis. And I have one more negative to throw in -- Amazon's weak earnings report yesterday doesn't spell good news for the e-commerce sector in general.
Sure, eBay is now 50% off its January high and we may be reaching the point of maximum pessimism about the company's prospects. But until I see a truly exciting new product or deal announced, or the stock gets cheaper, it looks like dead money to me.
Reader Comments (Page 1 of 1)
7-26-2006 @ 11:08AM
Ann Lambert said...
Dead Money? EBay has more FREE CASH FLOW than most companies of this size. EBay management DOES NOT LISTEN TO THE Analysts. Price target are always lower in relation to its current market price. EBay has a formula and discipline to DELIVER WHAT IS SAYS, always on the caution, experienced not to leap, but to meet its own internal results. Look at Google this Q2 their numbers blow away the street,
But the analysts did not mention ALOUD Google FREE CASH FLOW WAS LESS THAN $200 MILLION this quarter.
7-26-2006 @ 12:42PM
Tracy Riggs said...
I guess Credit-Suisse 12 month forecast of 45.00 is wrong...
Goldman Sachs estimate unchanged -left their target price at 54.00. I guess they are wrong...
Jefferies raised target outlook to 50.00. I guess they are wrong.
Bear Sterns to 33.00.I guess they are also wrong...
Along comes this Fat's guy out of no-where and says 28.00. I guess he thinks he is right.( Because he likes to buy cheap like Warren Buffet? He says he will buy when it gets down to 21.00. lol. What next? 19.00? 15.00?
I agree with bear Stearns. Strategic partners should enter the picture now...
7-26-2006 @ 2:01PM
Joe said...
My ebay sales down more than 80% This year.
7-26-2006 @ 7:19PM
Charles McPartland said...
Is the blogger a short seller??? How can any analyst with a look at the EBay Balance sheet and P&L come up with such a forecast?? Free cash flow is fantastic and buyers now will reap the true value in the very near term.
7-27-2006 @ 2:03PM
AL said...
Ebay is trading with a PE of 26. Shorts and Options have an affect on the stock price. Look at the Aug options. Although the buyback program is modest it shows confidence in the company. High oil prices might help Ebay sales. A number of factors have pushed the stock down and have no bearing on the valuation of the company. Skype might have been a bit high, however, long term probably a good decision. Large dealers are clearing out the small players. When they think the field is level don’t be surprised to get caught in a fast move upward.
7-28-2006 @ 1:53AM
Phil S said...
I do a ton of business on E-Bay, and I am a powerseller. E-Bay does not listen to it's selling members on improvements that need to be made. E-Bay better wise up and start listening or it is going to go down like the Titantic. Allowing shipping gouging and such has got to stop. I guess Meg is too busy nowadays, what with purchasing her dream toys, she has no time to run the business! We are tired, Meg, LISTEN to us!
7-28-2006 @ 2:48AM
EbaySlaveWorkerSince2001 said...
I don't really understand why the media & shareholders are not picking up on this but ebay is kicking mom & pop stores to the streets with this rate increase that is only to subsidize Ebay China free listings. Ebay is lying left & right and I suffer along with thousands of store owners by being put out of business. Ebay store owners should not have to carry the expenses for the country of China to list for free on the .com site, be 100% protected by paypal chargebacks and compete with us. How can I compete with China? My jewelry costs me $7 wholesale and I offer it for $10. China sells the exact same for $1 with a $12 shipping & handling fee.
I am an American, why do I get treated like a 2nd class citizen. No one is talking about the China situation & what impact it has on our economy. No ONE